Post by Crash Post by Rich80105
With the final election results, and with the swearing in of
Ministers, government departments are now able to pass on briefings to
the incoming ministers, enabling them to consider any restructuring
required with new emphases arising from the change of government, and
to start detailed planning on priority issues. We can expect
experience with Covid to have an effect; I predict greater use of a
'whole of government' approach to more issues which involve more than
one department, and the ability to progress some issues unable to be
dealt with due to NZ First.
Yes - all the excuses are gone. Labour will now need to focus
relentlessly on delivery, not just for one budget but for every aspect
of their term. Delivery was an aspect they were spectacularly poor at
over the last 3 years. COVID19 is a major issue - but only because it
causes a variation on those things that Labour needs to relentlessly
deliver on (such as recovery from the GDP contraction that COVID19 has
Post by Rich80105
For the Opposition, their rules will now allow more robust discussions
regarding leadership and the results of the election. They have
sensibly already started an analysis of what went wrong; I predict
they will try and blame a lot on individuals who have gone or who will
now go - Brownlee for example may be blamed for the tone-deaf
statemetns from Collins that contrasted with the positive approach of
others (for example Dr Shane) that captured the hope and interest of
many conservatives that detested silly negativity for no good reason.
If the right people are on the list, both Brownlee and Smith may well
go to allow some new blood; but I predict Collins will be left holding
the chalice she poisoned until next year in the hope that someone else
can be brought through . . .
It is far more than that. National (as in 2002-2005) will need to
refocus on the things that matter to voters that Labour are not
delivering on. Forget about the personalities involved - if National
cannot find the right issues or the right leaders to do this they will
flounder in exactly the same way that Labour did from the day after
the 2008 election until the day after Andrew Little resigned his post
as Labour leader in 2017.
It is worth remembering that Ardern has never been elected as the
Labour leader by the caucus of the day - a curious anomaly of the way
Labour elects their Parliamentary leader.
Post by Rich80105
With the government making sure money keeps circulating business will
continue to be relatively good; it will take time to wean some
businesses off cheap immigration labour for some jobs, but already we
are seeing quite a few small businesses now have the confidence to
take on apprentices.
Actually the COVID19 pandemic has delivered government debt and
spending levels unprecedented in this country's history. The debt
projections for the next few years would never have been tolerated in
a pre-COVID19 environment, with repayment options pinned entirely on
the expansion of the economy (and tax revenue) rather than increased
taxation. Labour face a very challenging future. National face an
even more challenging future identifying a credible alternative way
We seem to be doing fairly well so far - see below, but there is no
denying that we live in challenging times.:
New Zealand Inc reaps benefit of hard and fast Covid lockdown
Companies believe Wellingtons decision to put health over profits
could pay off
When Covid-19 struck New Zealand, Jacinda Arderns government quickly
closed the nations borders and imposed one of the worlds strictest
lockdowns in a bid to eliminate the spread of the virus.
The decision in late March plunged businesses into crisis, with many
forced to implement radical strategic changes to survive. Air New
Zealand was an early casualty, requiring a NZ$900m ($610.4m) bailout
But with most restrictions now removed and the virus apparently under
control, business confidence is coming back. Many corporate leaders
in industries from tourism to agriculture hope that Wellingtons
decision to prioritise health over keeping its economy open will prove
fruitful in the long term.
One thing most businesses havent had to experience throughout
Covid-19 is running out of cash or liquidity issues, said Mark
Hiddleston, head of the commercial and agricultural division at lender
ANZ New Zealand.
A farmer monitors dairy cows in Hamilton, New Zealand
Fonterra, the worlds biggest dairy exporter, is cashing in on strong
demand in China despite the pandemic © Brendon OHagan/Bloomberg
Mr Hiddleston attributed this partly to decisions by New Zealands
central bank and Treasury to swiftly roll out interest rate cuts and a
wage subsidy scheme.
New Zealand, like many other big economies, is in recession, with its
gross domestic product contracting by a record 12.2 per cent in the
second quarter. But unemployment has remained low, with the official
rate at just 5.3 per cent as of September, while a predicted surge in
corporate insolvencies has not materialised.
Business confidence is creeping higher. A survey of 700 global
business leaders by Bloomberg in October ranked New Zealand as the
nation that has best handled the pandemic and the market they would be
most confident investing in.
Line chart of Index showing Business confidence has bounced back in
IMF forecasts suggest the decision to implement a strict lockdown
early could pay off. While New Zealands economy is projected to
contract 6.1 per cent this year worse than in the US but better than
in the UK it could grow more quickly than either of those nations
next year, at 4.4 per cent.
New Zealand looks relatively better off because pursuing eradication,
as we call it, has enabled our economy to return to a new normal,
said Mike Bennetts, chief executive of Z Energy, a fuel distributor
with almost 400 service stations and truck stops. Most businesses are
open and able to operate without strict social distancing rules in
place, even if borders remain shut.
Mr Bennetts was among the business leaders that advocated a fast and
hard lockdown before the spread of Covid-19 in New Zealand had a
chance to reach the severity of hard-hit nations like Italy.
Despite the initial impact of Covid-19, we have seen demand for
dairy in China recover quickly
Miles Hurrell, Fonterra
When Wellington implemented its most severe lockdown measures on March
25, which included tough restrictions on movement, demand for fuel
plummeted 85 per cent. That forced Z Energy to raise NZ$350m to
bolster its balance sheet.
But demand for fuel outside of the aviation sector has now almost
fully recovered as the economy has reopened. In hindsight, one could
argue that [the capital raise] wasnt really needed, said Mr
Some big businesses in New Zealand are benefiting from a recovery in
other economies that also locked down early.
Fonterra, the worlds biggest dairy exporter, in October upgraded its
milk price forecasts for 2021 by more than 6 per cent due to strong
demand from China. That could deliver an additional NZ$10bn to New
Zealand farmers who sell to the group.
Despite the initial impact of Covid-19, we have seen demand for dairy
in China recover quickly, said Miles Hurrell, Fonterras chief
Prices for New Zealands other main agricultural exports beef, lamb,
and fruit and vegetables have remained firm, supporting an industry
that contributes about 5 per cent of GDP. One big challenge for the
sector is finding enough workers to fill fruit-picking jobs during the
Coronavirus has also helped boost the profits of healthcare and
technology groups. Fisher & Paykel Healthcare, a NZ$20bn maker of
respiratory products used to treat Covid-19, has said that its profits
in the year ending March 2021 could rise by as much as a third due to
Shares in Xero, a Wellington-based accounting software platform for
small businesses, have doubled since Ms Ardern ordered her nationwide
lockdown, as its business has boomed.
Parts of New Zealands important tourism industry, which is reliant on
foreign visitors, have also managed to adapt even as the countrys
borders remain closed.
Prime minister of New Zealand Jacinda Ardern arrives for a meeting
with her MPs at parliament following a landslide election victory in
October © AFP via Getty Images
It was pretty dramatic because we immediately saw 90 per cent of the
New Zealand business disappear overnight, said Grant Webster, chief
executive of Tourism Holdings Limited, one of the largest camper van
providers in New Zealand, Australia and the US.
That prompted Mr Webster to pivot towards domestic tourists and focus
on new revenue streams, such as providing motorhomes for residents
returning from overseas to quarantine in.
The groups total vehicle sales surged 73 per cent year on year
between April and August, helping it to reduce its net debt by almost
half. Tourism Holdings share price has recovered by 325 per cent
But not all tourism businesses have the flexibility to pull off this
sort of transformation.
Air New Zealand lost NZ$454m in the year to June and has slashed 4,000
jobs. It is burning through NZ$65-NZ$85m a month and is likely to have
to raise new equity by mid-2021, say analysts.
The airline is likely to be lossmaking and in a cash burn situation
until borders reopen, said Andy Bowley, head of research at Forsyth
Barr. A mooted travel bubble with Australia could help it to break
even again, he added. Industry groups have asked the government to
relax border rules for visitors from nations deemed low risk in terms
However, some are concerned that largesse from Wellington in the form
of wage subsidies and rules protecting directors from prosecution for
trading while insolvent both of which expired in September may
have delayed a bigger crunch for the countrys corporate sector.
The danger is that when these companies collapse they could pull
other businesses down with them
Karen McWilliams, Chartered Accountants Australia & New Zealand
Insolvency experts warn that a spike in bankruptcies is inevitable,
with creditors likely to begin enforcing debt repayments in the coming
There is a disconnect with the economy in recession and only a low
level of insolvencies. The concern is that there are zombie companies
still operating that would have failed under normal circumstances,
said Karen McWilliams of Chartered Accountants Australia & New
The danger is that when these companies collapse they could pull
other businesses down with them.
Still, some executives say New Zealands apparent success in
eliminating community transmission of Covid-19 a feat achieved by
few other countries leaves it well placed to benefit from any global
The country has experienced a surge in professional New Zealanders
returning home from jobs overseas during the pandemic and some think
more foreign investors and skilled workers could be tempted to follow
them when international borders eventually reopen.
If youre a kiwi working for, say, Apple in New York, and youre
given the option of returning to New Zealand to live while keeping
your job thats a compelling proposition, said Justin Murray,
chairman of investment bank, Murray & Co. The key issue here is more
one of government policy. How will the government harness New
Zealands Covid-elimination success to benefit our economy?